Investors sue Oracle, say it hid how shaky the OpenAI deal was
Investors are suing Oracle, alleging the company failed to disclose financial risks regarding its massive $300bn deal with OpenAI.Summary
A Michigan public pension fund, the City of Sterling Heights Police & Fire Retirement System, has filed a class-action lawsuit against Oracle in a Tennessee state court. The lawsuit alleges that Oracle misled investors during a $25bn note sale in February by failing to disclose the instability of its deal with OpenAI. While Oracle reported a massive surge in remaining performance obligations—growing from $97bn to over $523bn—the suit claims this growth was almost entirely driven by OpenAI, which had reportedly missed its own revenue and user targets.
The complaint further alleges that OpenAI's finance chief had privately expressed doubts about the company's ability to fund its promised cloud computing purchases. To meet these commitments, Oracle has reportedly taken on significant debt, including tens of billions in capital spending and over $200bn in long-term leases. This heavy investment has led to concerns regarding concentration risk, contributing to a drop in the price of the notes and volatility in Oracle's shares.
This legal action highlights broader industry anxieties regarding the "AI bubble" and the sustainability of the massive debt being used to fund AI infrastructure. Oracle is not alone in this scrutiny, as Microsoft also faces shareholder litigation regarding AI spending. The lawsuit names several high-profile figures, including co-founder Larry Ellison and former CEO Safra Catz, as well as multiple international underwriting banks.
(Source：TNW)